Posts Tagged ‘Federal Reserve’

The Obama administration is close to announcing that former Israel Bank Governor Stanley Fischer will take over the number two position at the Federal Reserve Bank under recently confirmed director Janet Yellen.

Fischer was hoping to be named head of the Fed, but at 70, his age was a barrier.

Fischer is widely respected in financial circles, and he has been credited, perhaps too much, with having steered Israel’s economy to become one of the world’s strongest during the global crisis after the 2008 financial fallout in the United States.

Fischer also is seen as being responsible for keeping down the value of the shekel against the dollar so that exports would not suffer.

He left the United States to take over as Governor of the Bank of Israel in 2005, agreeing to make aliyah because the job required his becoming an Israeli citizen. However, his Zionism lasted only as long as he wanted to stay on the job. He quit in the middle of his second term earlier his year and moved back to the United States.

Since quitting, he has been more vocal in his opinions that Israel must concede to most Palestinian Authority demands.

Was it all the negative articles in which the other front-runner for Federal Reserve Chair, Janet L. Yellen, was compared to Lawrence Summers and Summers was found wanting? Was it that, plus the snarky articles pointing out that despite what some saw as Yellen’s superior credentials, that Obama was intent on naming Summers to replace Ben Bernanke as the head of the Federal Reserve? Was it the remaining residue of sexism that plagued Summers when he was the president of Harvard University that finally caught up with the politically correct police guarding the gates in Washington?

According to the letter Summers released following his telephone call to the White House to inform the president of his decision, he wanted the job but recognized the deleterious sideshow that would ensue were the president to name the prickly former secretary of the treasury.

But timing was probably the decisive factor in Summers’ withdrawal. Had the president not just gone through a bruising clash with the left wing of his party over the potential use of military force in Syria, which followed on the revelations of this administration’s sanctioned government snooping by the National Security Agency, the president might have pushed hard for his choice, and Summers might have been willing to take on whatever criticism would come his way in a confirmation hearing. But this summer’s one-two NSA-Syria punch sucked out all the air from Summers’ sails.

“I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery,” was what the 58-year old Summers wrote, according to an article posted to the Wall Street Journal website late Sunday afternoon.

The Federal Reserve system, which sets monetary policy for the country, is the central banking system of the United States. The chairmanship of the Fed will be open after January 31, when the second term of the current occupant, Ben Bernanke, concludes. Bernanke did not wish to continue for a third term.

Mr. Obama accepted Summers’ withdrawal, although it was widely believed that the former secretary of the treasury and president of Harvard University was the president’s first choice.

Obama described Summers as “a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today.”

While Summers was the first Jewish president of Harvard University, he would hardly have been the first Jewish chairman of the Federal Reserve.

In fact, while the chairman of the Fed has been a Jew for more than the past 25 years, with Alan Greenspan at the helm from 1987 – 2006, and then Bernanke in the seat from 2006 until his term ends in early 2014, there have been at least three other chairmen who have been Jewish. However, there has never been a woman chair, and the likely choice now for President Obama is Janet Yellen.

Yellen, 67 years old, is currently the vice-chair of the Fed. She is also Jewish.

Is it likely the old anti-Semitic canards about Jews running the global financial market will start up again if Yellen is named? No, because they never stopped. Enter the words “Jew” and “Federal Reserve” in a search engine and be prepared to see lots of hysterical rants from Jew-haters.

Lawrence Summers, who was the first Jew to become president of Harvard University, will replace Ben Bernanke to head the Federal reserve, the Japanese newspaper Nikkei reported early Friday morning. It cited unnamed sources.

Bernanke’s term expires in January, and Summers was competing with Janet Yellen, currently the vice chairman of the Fed, for the post. Stanley Fischer, who recently quit in the middle of his second term as Governor of the Bank of Israel and returned to the United States, reportedly wanted the post. His age was one major factor that kept him from being a front runner.

Summers’ mother was of Romanian-Jewish ancestry, and his father, whose father’s name was Samuelson, was Jewish. Both parents were economist, and Summers Is the nephew of Paul Samuelson, known to thousands of university graduates for his textbooks on economics.

In 2002, Summers wrote of himself, “I am Jewish, identified but hardly devout.”

Outgoing Bank of Israel Governor Stanley Fischer dodged questions from the Financial Times on whether he wants to succeed Ben Bernanke as director of the Federal Reserve.

Fischer is quitting his job in Israel only two years after his second term started, and it has been widely speculated he wants to take a run for the job Bernanke will vacate next January, even thought it will take a special exception to hire him because he is already 69 years old.

He told the Financial Times he cannot “accept a job offer that no one has made.”

Stanley Fischer is the head of the Bank of Israel. As such, he is the government appointed goon in charge of money printing. In his infinite wisdom, he is supposed to know exactly what the supply of money should be, because he’s purportedly a chacham she-ein kamohu – a crazy genius who has a pulsating brain and somehow knows these things. Or maybe God comes to him in his sleep and tells him how many shekels should exist and how much he should print and when.

Or maybe he’s just some guy who has no idea what he’s doing, given a power the equivalent of an economic nuclear weapon, something that no one man should ever, ever have.

Stan the Super Shekel Man recently came out with an announcement that he would be quitting his post early. Aside from the speculation as to why (I think it’s because he knows there will be an unstoppable economic tsunami in the next 3-5 years and he wants to duck out early and quit while he’s ahead), I have seen nothing but wall to wall praise for this central planning money printing soviet-style currency czar. Sure he’s kindly, has a sweet voice, an endearing Zambian accent, cutely mixes up male and female in his Hebrew grammar all the time, and the Israeli economy didn’t totally collapse in 2008 so everyone assumes the money master is responsible for saving us all from destitution. But this is all a big, sad, sorry myth.

Let’s break it down.

Let’s step aside for a moment from the persona of Stan the Man himself. He as a person is not the main problem. As I said, he’s a nice guy. The main problem is the very system of central banking that give men like him inordinate power over all of our economic lives, a power which, once you realize the scope and consequences of it, can make you dizzy.

Imagine for a moment two national economies. One where the supply of shoes and their price is controlled by one man and anybody else who manufactures or uses shoes besides him goes to jail, and another where the supply of shoes and their price is controlled by the free market, meaning a myriad of entrepreneurs freely importing and exporting shoes based on the demand for them by customers. In a free market where anyone can manufacture and buy as many or as few shoes as he wants, the supply, demand, and price of shoes will tend to reach an equilibrium point where profits will remain constant and steady. Shoe firms like wholesalers, manufactures, and retailers, will all compete with each other to sell the most shoes to the public. In order to do this, they will have to make shoes of the highest possible quality at the lowest possible prices in order to attract buyers.

If the supply of shoes gets too high, shoe prices will tend to fall, lowering profit margins, thereby restricting the amount of shoes manufactured, choking off supply, and bringing shoe prices back up to equilibrium. If demand gets too high, shoe prices will tend to rise, increasing profit margins, encouraging shoemakers to produce more in order to earn those increased profits. This brings supply back up to match demand, bringing prices back down to equilibrium again.

Now, in an economy where the supply of shoes and their price is controlled by one man, let’s call him the chairman of the Shoe Bank of Israel, we are entrusting a single person to:

Manufacture every single shoe in the country, because anyone else who does that is considered a shoe counterfeiter and goes to prison

Know automatically what the supply of shoes in the country should be at any given moment

Set the price of shoes at whatever he thinks it should be

Not abuse this power

The shoe market in such a country would be a complete mess and everyone who needs shoes would be miserable. Since only one firm would be allowed to make and sell shoes, there would be no competition and the quality of the shoes would deteriorate. If the Chairman of the Shoe Bank of Israel set the price of shoes too low, meaning he underestimates demand, people would start hoarding the shoes and buying more than they need, and there would be shoe shortages. If he sets the price of shoes too high, meaning overestimates demand, people who needed new shoes would not buy them, instead waiting for a lower price. Perhaps they would attempt to repair their old shoes, or cut open the ends if they didn’t fit. Huge surpluses of shoes would result.

I can really appreciate Chanukah since it’s a festival about oil, and my family and I understand the value of oil lasting for eight days. We will light the ceremonial menorah at the White House and then enjoy some delicious lattes.

– George W. Bush, president

I’m gonna put on my yarmulka and sing with my harmonica and create another hit record about famous Jews. Hey, can I borrow this article when you’re done?

– Adam Sandler, singer/actor

I will inflate the spirituality of my home through lighting the menorah. I will take stock of the history of the day and enjoy it for its religious beauty while making sure family spending is within our budgetary limit.

– Allan Greenspan, former Federal Reserve chairman

I relate to Chanukah so much that I’ve even adopted the name of its main heroine, Esther. Every time I bite into the traditional bitter herb I think back to the ancient Hebrews and how much they endured. I will celebrate the holiday by purchasing red strings and specially blessed Kabbalah Water for my family and celebrity friends. It’s frighteningly overpriced but it really adds spirituality to our lives.

– Madonna, pop icon

What is Chanukah and why do people celebrate it? You definitely can’t say it’s a holiday about nothing since it’s a festivus for the rest of us, yada, yada, yadaI might buy myself some new sneakers, but I’ll stay away from last year’s pirate puffy shirt – not that there’s anything wrong with that. My kids are going to eat latkes with brussels sprouts from a recipe in my wife’s new cookbook, which by the way would make a great Chanukah gift.